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Informist, Friday, May 9, 2025

By Sourabh Kumar

MUMBAI – The rupee ended sharply higher against the dollar, a day after it slumped over 1%, supported by dollar sales by exporters and likely intervention by the Reserve Bank of India, dealers said. 

"Yesterday, there was panic buying, so a lot of people sold today," a dealer with a state-owned bank said. "Also, people are not thinking the rupee will fall as fast and as much now as it fell on Thursday."

After moving in a range of 54 paise, the Indian currency settled at 85.3700 a dollar Friday. On Thursday, the rupee had closed at 85.7100 per dollar. On a weekly basis, the rupee's fall was near the largest since December 2022. It fell 81 paise in the week to Friday.

On Friday, the rupee opened lower as the dollar index strengthened. The dollar index, which measures the strength of the greenback against a basket of six major currencies, rose to a near one-month high of 100.86 early Friday. At 1530 IST, it was 100.45, tad down from 100.63 Thursday, but up from 99.87 Wednesday.

The dollar strengthened on the optimism around the US-UK trade deal. US President Donald Trump announced a trade deal with the UK on Thursday, leaving a baseline tariff of 10% tariff on British imports to the US. Further, US President Donald Trump said he expects trade negotiations with China when US Treasury Secretary Scott Bessent and Chief Trade Negotiator Jamieson Greer meet Chinese officials in Switzerland Saturday. 

After opening lower, the rupee fell further for a very brief period, hitting 85.8625 a dollar, the lowest since Apr. 15. However, it quickly recovered, as exporters sold dollars in large quantities, noting relatively higher dollar/rupee rates, dealers said. "They (exporters) were waiting for a long time, and as those were good levels for them to sell," a dealer with a foreign bank said. 

Apart from exporters' persistent dollar sales, the RBI also likely intervened in the currency market, selling the greenback to prevent the rupee from falling sharply, dealers said. Since then, the rupee has largely remained on an upward path against the dollar. The gains were limited due to some dollar purchases by importers. 

Exporters also sold the greenback on expectations that hostilities between India and Pakistan may not intensify more, dealers said. "People have also offloaded dollars as they think there is some ease in India-Pakistan tension," a dealer with another state-owned bank said.

"Our analysis of the history of India-Pakistan conflicts suggests that the market impact (including on USD/INR) tends to be relatively short-lived, especially in the post-1999 Kargil War episodes," MUFG Bank said in a report. "Over time, we think the fundamentals of a weaker dollar, gradual improvement in India's growth, a more accommodative RBI, coupled with some likely trade deals struck in India's favour, should support INR over the medium-term."

FORWARDS

The one-year dollar/rupee forward premium ended lower after hitting an over six-week high earlier in the day, dealers said. After the one-year dollar/rupee forward premium hit 2.42%, the highest since Mar. 26, some exporters sold forward dollars at relatively higher premiums, dealers said. 

The benchmark 10-year US Treasury yield rose, which also pushed down the one-year forward premium, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

At 1530 IST, the one-year exact-period dollar/rupee forward premium was 2.30%, down from 2.36% Thursday. On an absolute basis, the premium settled at 196.03 paise, down from 201.97 paise Thursday.

OUTLOOK

The foreign exchange market is shut on Saturday and Monday. On Monday, it is shut on account of Buddha Pournima. On Tuesday, the rupee will take cues from the movement of the dollar index and the Chinese yuan. Worsening tensions between India and Pakistan over the weekend may weigh on the rupee, dealers said.

A rise in tensions between the two neighbours may lead to foreign fund outflows from financial markets, weighing on the Indian currency, dealers said. This may also drive importers to purchase the greenback, dealers said.

However, exporters are likely to sell dollars at relatively higher dollar/rupee levels, which may limit the fall in the rupee, dealers said. During the day, the rupee is seen moving in a range of 84.80 and 85.80 a dollar. They peg immediate technical resistance for the rupee at 85.00 a dollar.

India Rupee - World FX: Pound sterling rises 0.2% after US-UK trade deal

NEW DELHI – The pound sterling rose 0.2% against the dollar after the US and the UK announced a deal to lower tariffs on some goods on Thursday, with the US cutting levies on cars and steel. However, gains were limited as US Commerce Secretary Howard Lutnick said the 10% tariff on imports from the UK would remain in effect and the UK retained the digital tax on large US tech companies.

Bank of England Governor Andrew Bailey on Friday said the trade deal was a good thing, but still left tariffs on most British exports to the US higher than they were before last month. The UK central bank on Thursday cut the interest rate by 25 basis points to 4.25%, as widely expected. 

The dollar index remained broadly strong on Friday ahead of the US-China trade negotiations, which will start on Saturday in Switzerland. US President Donald Trump said he expects substantive negotiations between the US and China on trade and predicted that punitive tariffs on Beijing of 145% would likely come down.

The dollar index remained strong as bets of imminent Federal Reserve rate cuts receded after the central bank indicated it was in no hurry. At 1550 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.42, from 100.63 on Thursday and 99.87 on Wednesday.

The euro was also up 0.2% against the dollar. European Central Bank policymaker Olli Rehn said on Friday the eurozone's fight to bring inflation back to the 2% target is on track, but the growth environment is deteriorating, with a global trade war creating a significant risk on the outlook.

The yen rose 0.5% against the dollar even after Japan's real wages in March fell 2.1% from a year earlier, marking the third consecutive monthly decline, as income growth continued to fall behind price hikes, government data showed Friday.

The Australian dollar was flat against the US dollar, while the New Zealand dollar was down 0.1%. (Pratiksha)

India Rupee: Premium comes off 6-wk high as bks sell fwd dlrs at high levels

MUMBAI – The one-year dollar/rupee forward premium fell from an over six-week high it hit earlier in the day, as some banks sold forward dollars to take advantage of relatively higher forward rates, dealers said.

"Some receiving has come in, as they are quite good levels," a dealer with a state-owned bank said. After the one-year exact-period dollar/rupee forward premium hit 2.42%, the highest since Mar. 26, some exporters sold forward dollars on the view forward premiums may not rise further, dealers said.

The benchmark 10-year US Treasury yield rose, which pushed the one-year forward premium down, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Forward premiums had risen sharply earlier as some banks purchased forward dollars, taking advantage of the arbitrage opportunity between the onshore forward and offshore non-deliverable forward rates, dealers said. 

Fears of a further escalation in tensions between India and Pakistan also pushed forward premiums higher in early trade, dealers said. Market participants would remain cautious of a further rise in tensions between the two nuclear-armed neighbours, dealers said.

Strength in the dollar also pushed forward premiums higher earlier in the day. The dollar index strengthened after US President Donald Trump announced a trade deal with the UK. This trade deal helped US assets gain some investor confidence, giving a boost to the dollar. More trade deals in upcoming weeks could further improve investor confidence in US assets. The dollar index had hit a near one-month high of 100.86 early Friday.

The one-year exact-period dollar/rupee forward premium was 200.77 paise at 1410 IST, a tad down from 201.97 paise Thursday. It was at 2.35%, slightly lower from Thursday's 2.36%.  (Sourabh Kumar)

India Rupee: Sharply up; erases all losses as banks sell dlrs likely for RBI

MUMBAI – The rupee erased all losses and rose sharply against the dollar as state-owned banks sold the greenback, likely on behalf of the Reserve Bank of India, dealers said. They said the central bank likely intervened across multiple dollar/rupee levels.

"There seems to be some intervention by the central bank," a dealer with a foreign bank said. "Volumes are lower before the long weekend as people don't know what will happen over the weekend."

Before rising sharply against the greenback, the rupee hit an over three-week low of 85.8625 a dollar early Friday, a level at which most exporters sold dollars in large quantum, dealers said. The RBI is also likely to have sold dollars across multiple dollar/rupee levels to prevent the rupee from falling further, dealers said. A fall below 86.00 a dollar could trigger multiple stop-losses on short dollar, dealers said.

Gains in the Indian currency were capped as importers purchased dollars, fearing a further escalation in India-Pakistan tensions, dealers said. A strong dollar index also limited the upward move of the rupee, dealers said. The dollar index, which measures the strength of the greenback against a basket of six major currencies, rose to a near one-month high of 100.86 early Friday, after the announcement of the US-UK trade deal Thursday. At 1300 IST, the dollar index was 100.45, slightly down from 100.63 Thursday, but higher than 99.87 Wednesday.

A fall in domestic equities also weighed on the rupee, dealers said. Both the Nifty 50 and the BSE Sensex were down about 1% at 1302 IST. During the day, the rupee is seen moving between 85.30 and 85.90 against the dollar. Dealers see strong technical resistance at 85.30 a dollar.  (Sourabh Kumar)

India Rupee: Technical levels for rupee - May 9

MUMBAI – At 1123 IST, the rupee was at 85.6600 per dollar. At 0900 IST, the rupee was at 85.8100 a dollar, against the previous close of 85.7100. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha)

India Rupee - Asia FX: Mixed; Taiwan dlr up on strong exports amid US tariff

MUMBAI – Asian currencies were mixed against the dollar as market participants assessed the trade deal between the US and the UK. US President Donald Trump announced a trade deal with the UK on Thursday, leaving a baseline tariff of 10% tariff on import of British goods. 

Trump expressed confidence about progress in talks with China, boosting investor sentiment. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet Chinese Vice Premier He Lifeng in Switzerland to hold trade negotiations, potentially paving the way for a deal that could see the US lower its 145% tariff on import of certain Chinese goods.

After the UK deal, the dollar index strengthened and hit a near one-month high of 100.86 early Friday. At 1013 IST, the dollar index, which measures the strength of the greenback against a basket of six major currency, was at 100.60, little changed from Thursday's 100.63, but higher than 99.87 on Wednesday.

Data released early Friday showed China's exports rose in April in the face of tariffs by the US. Exports were up 8.1% on year, more than the 1.9% expected in a Reuters poll. However, the pace of exports growth was slower than 12.4% in March. The offshore Chinese yuan, however, fell on Friday, down 0.1%, as market participants remained cautious about US-China trade talks.

The Taiwan dollar was up 0.6% against the US dollar as exports from the island nation rose 30% on year in April to $49 billion, much more than the 16% rise expected by economists in a survey by Bloomberg. 

The South Korean won rose 0.3% against the greenback after data released early Friday showed South Korea's current account remained in surplus in March, for the 23rd straight month. The country's current account was in surplus of $9.14 billion in March, up from $7.18 billion in February.

The Philippines peso was up 0.1% after the country's central bank kept the benchmark rates unchanged Thursday. It said the decision was based on firm domestic demand and continued global growth and trade activity.

The Malaysian ringgit fell 0.9% against the greenback after the country's central bank hinted at a possible rate cut at the upcoming meeting, after keeping the benchmark rate unchanged at 3.0% Thursday. The Indonesian rupiah was down 0.2% against the greenback. The Thai baht was down 0.3% due to strength in the dollar.  (Sourabh Kumar)

India Rupee: Tad down as dollar index rises; exporters' dlr sales limit fall

MUMBAI – The rupee was slightly down against the dollar due to strength in the dollar index, dealers said. The fall was, however, limited as exporters sold dollars to take advantage of lucrative levels, dealers said. 

"There are just exporters who are selling," a dealer with a state-owned bank said. "Corporates are selling because they are getting such a good level. But I do not expect (dollar/rupee) levels to stay lower, because some buying has come in."

After opening lower at 85.8100 a dollar, the rupee fell more for a brief period, hitting an over three-week low of 85.8625 a dollar. But exporters sold dollars in large quantum at those levels, which limited the fall in the Indian currency, dealers said. A few dealers speculated that the Reserve Bank of India might have sold the greenback in the offshore non-deliverable market and then in the onshore market to prevent the rupee from falling more.

A rise in the dollar index weighed on the rupee, dealers said. Boosted by optimism around the US-UK trade deal, the dollar index, which measures the strength of the greenback against a basket of six major currencies, rose to a near one-month high of 100.86 early Friday. On Thursday, the dollar index was at 100.63, higher than 99.87 on Wednesday. US President Donald Trump announced a trade deal with the UK on Thursday, leaving a baseline tariff of 10% tariff on import of British goods. 

A fall in domestic equities also weighed on the rupee, dealers said. Both the Nifty 50 and the BSE Sensex were down 0.8% at 0920 IST. Market participants are tracking developments on the India-Pakistan border. Any news indicating further escalation in military action by either country could weigh on the rupee, dealers said. It could also lead to foreign fund outflows, which could put the rupee under more pressure, dealers said.

During the day, the rupee is seen moving between 85.50 and 86.00 against the dollar. Dealers see strong technical support at 85.90 a dollar. Dealers said the rupee might continue to fall, with an accelerated downward movement in the rupee in the case of a deteriorating situation at the India-Pakistan border, with chances of stop-losses on short dollar bets below 86.00 a dollar, dealers said.  (Sourabh Kumar)

India Rupee: Expected range for rupee - May 9

MUMBAI – Following are the expected support and resistance levels for the rupee on Friday, as forecast by leading banks and brokerages in an Informist poll:

(Sourabh Kumar, Pratiksha, and Gowri Lakshmi)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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